Readers' comments

Wonder why every once in a while Economist fancies on Japan and its beleagured state of affairs. Is it love, passion, pity or a Japan stationed Economist author reprinting the routine?

I am not trying to bad mouth but even if we see the arguments put together one by one, they are not just Japan's issues:

1. Aging population and pension issues - Europe has it. American would face it and China is already seeing a decline in work force and mulling over more changes to its one child policy

2. Aging economy: Matured economies have moved towards services far away from manufacturing. UK has done it, US has done it, Western Europe is doing it and so would Japan.

3. Capital Markets: While there is some truth to the argument that Japan is somewhat underdeveloped in capital markets, one has to understand that Japan never did really apply Anglo-Saxon capitilism to the book, but always adapted and customized it to its wish. China is doing it now and only time will tell how will the new form of communistic capitalisam will take shape.

I can go on, for some more time but I think I made my point, Japan is old, ailing and having issues - what else ?

While building awareness about current state helps, just reminding the same stuff that ran for last week makes news stale. Would love to see what is new happening in Japan
- Are Japanese banks only cash rich and lending it without strings to west ?
- Is the 2 party political system changing course ?
- How are they dealing with pension issue ?
- Are they getting women/old people into work force ?
- What about bio-tech patents, robotics, stem cells, fuel cells where Japan has been making news ?

Though most of these may not be news, a follow up on them would also help sometimes, like Economist follows up on Japan's issues !!

The Japanese financial system systematically insulated decisions about allocating capital from market signals. With a heavy reliance on bank lending, an absence of transparency and full financial disclosure, and a suppression of equity markets through stable cross-shareholding, the Japanese system allocated funds according to established relationships and government targeting of "strategic" industries rather than in pursuit of the highest return.

Despite the shortcomings of its financial system, the Japanese economy was able to perform impressively as long as it was playing technological catch-up with the more advanced West. It is much easier to grow and improve productivity quickly by adopting and adapting technologies invented elsewhere than by developing those new technologies internally. And capital can be allocated productively even when market returns are more or less ignored, provided that the trail of economic development has already been blazed. Once, however, Japan reached the technological frontier, the absence of direction from market signals became a serious hindrance.

Looking ahead to 2050, Japan is actually best placed to rebuild
a fully sustainable nation:
1. It once had a fully self-sustainable economy, with all the necessary mentalities.
2. Its population is on a rapidly declining trend unless birth rate or immigration picks up. This means its self-sufficiency can increase while its carbon footprint decreases.
3. Because of the dire energy straits it went into during the First and Second Oil Crises, it has significant technological advantages in energy efficiency for both industrial and household uses. (Seriously, if you are looking for revolutionary energy saving technology in any field, learn Japanese and sift through Japanese language science/technology/engineering journals [Japan's best engineers tend to be worst linguists]).
4. Majority of the Japanese people are so bad at foreign languages, that they have no choice but to make the best out of their home country.
I'd be very interested in finding out what would be written in "This is Japan 2058", though I'd have to be VERY lucky to live to see the day.

At the risk of sounding harsh,comments from those who put their money where their mouth is on Japan, by making investments in the market place, are a lot more credit worthy than just sniping from the sidelines. Without trying to open a philosophical can of worms, how can a country be “the most communist on earth” and be “a shining example of fascism” at the same time since those two are polar opposites?
The key word, as someone said in this string, is “re-build” which means making the structural changes necessary however, the since large scale changes are constantly thwarted by the iron triangle of large business, elected officials and top bureaucrats (just look at the recent Doha round of talks) what will be interesting to see within the next ten years will there be another lost decade, false starts, and dithering for the structural changes in the labor and financial markets as a result of the ageing and declining population. No wonder many people in Japan are asking Koizumi(whatever your opinion of him might be) to come back as Prime minister.
The irony about the declining population is that the cities are going to get larger as more and more people migrate for economic reasons to urban areas for economic survival. Whether or not as cities grow so does the carbon foot print, I am not an expert in that field but my intuition says yes.

AchillesGUnit's view seems quite old-fashioned which used to be popular 30 years ago. It's amazing how many people have recommend it. Has the government told Sony to creat Walkman? or Toyota to manufacture Prius?

By the way, I tend to agree with Shiruchan that Japan's future doesn't seem optimistically bright as this article writes.
There are many bright people in Japan but they tend to concentrate in arguing internal consistency rather than making productive output.

"Japan is in pretty bad shape economically, and it's only going to get worse. They're a shining example of a perfect fascism. They truly are a fascist country, and the whole thing is set up to implode itself because of certain attitudes and ideologies."I don't know much about the Japanese economy system but I have to agree with you that "they're a shinning example of a perfect fascism." I used to work for a major Japanese bank office in Southern China during the late 80s. My boss was scared shitless with shaking knees every time a visit from his higher above. As I had lived under Communist party rule for many years never had I seen anyone would behave like my Japanese boss did toward their higher level personals or supervisors in the company. My boss had never dare to challenge his upper with different ideas directly. All he did was keep nodding his head furiously and keep saying "yes" or " you are right." in Japanese. The way to got his opinion and idea in was very tricky. He spent lots of time scheming how to safely skillfully slip in his opinions and ideas through other people in the company who had special relationship with those who were in charge. Those people were usually the relations of the the highest rank officials in the company. But by the end of the day while we had a drink, my boss would fantasizing how to knife his supervisor.

I thought I might as well offer some comments from views of Japanese living in the literally "Japanese society" right now.The history was fine, the figures of construction are well presented, but the article failed to point out the ailing bits of the system: its people (and therefore country) will be becoming poor and poor.Aging population...it cannot be helped. But what about the distribution of wealth? As the article pointed out, it goes all to the vested interests in any parts of the society. (The higher ranks at the company, the less they work and add values to the company; this happens at many companies.) Old pigheads govern so much of the power. What can you expect for? (ref to my comments in below)Remember, four months ago, Economist sarcastically described the Japan as "Japain", which I found very interesting and humorous; but the Economist received pointless critique of calling it an impolite and untrue etc by a Japanese politician who has no understanding of sarcasm and still mentally lives in good old days of Japan and cannot even see and face the reality down at the society. This is the Japan right now."How about the growth? This is partly answered by others, but looking at young lethargic people and rotten system to "disable" youngsters, how could they work hard and become more innovative. The innovations you see are all legacies of people who are going to retire. Then, who would create the innovation, espceially without ambition and with system to let down aspiration?Okay, one may say, it goes true for Europe. The manufacturing industries are heavily severed. Europe had to go through hard times during the transition (still in its process.) You simply cannot sustain 100 million people by service industry located in islands.One should know by fact that India and China would surpass (or have already surpassed to some extent) Japan now. Some special fields Japan could still remain its position or grow is "character-related industry" ie anime and some limited technological fields. Maybe, due to increase of wealth, Japan may welcome more tourists from abroad.That's all I could think of right now.Well, I would hope the Economist would go further depth than my comments.

Having a Japanese wife and having visited Japan I can see that no matter what ills may come for that nation they will undoubtedly survive any major changes necessary, as a society they are very cohesive, especially when compared to others. That Japan still holds large amounts of U.S. currency and treasuries means they are both at risk and protected to a degree from sudden economic woes, depending on the misfortune to come first. In relation to the strategic geographic location of the country, being close to other economic powerhouses such as China, Taiwan and South Korea, they are well-placed to take advantage of their still broad manufacturing and technology base. However, as they are tied to so many negatives, such as declining-value U.S. currency reserves and too few avenues for energy supply expansion, they are politically vulnerable to regional industry. It is no wonder Japan is now vigorously trying to mend relations with neighbors, most notably China. The shifting of economic power to other regions, from Europe and North America to Asia, the Middle East, Eastern Europe and South America is changing the face of politics and economics across the globe. How well the west handles the transition is hard to say, though I do expect further resource wars to be more openly direct as opposed to the failure of the unilateral Iraq adventure.

Japan is in pretty bad shape economically, and it's only going to get worse. They're a shining example of a perfect fascism. They truly are a fascist country, and the whole thing is set up to implode itself because of certain attitudes and ideologies. First off, they have a tradition of "putting away the stinky things." If it's a fact, and it's bad... best to hide it. They are DROWNING in debt, regardless of however much of our debt they own... they're still IN staggering debt. Furthermore, the Yakuza has been so deepened into their banking system and markets that they're completely unstable as well... not to mention that it's a bunch of OLD MEN running the show over there who wouldn't even consider changing ANYTHING. Oh yeah, and the educational standards have been so dumbed down and the society itself been so deliberately socially engineered to have turned the younger population into a society of something that makes the word UNDERACHIEVER suddenly not be able to sum it up. They have a growing populatin of people who don't even WANT to enter society or work or do anything with their lives whatsoever. Workplace security is almost dead... they have HAKEN who can come and do the job for cheaper, and no benefits. NOBODY is innovating anything anymore... in fact the BEST thing they put out other than cars and stereo equipment is toilet seats. Aside from that... they're screwed... SCREWED SCREWED!The next ten years will be interesting to watch.

Arcellor mittal is neither indian or european..its a global multinational company which owns steel company in indonesia ,africa ,europe and its interests lies in india as well mostly joint ventures with Tata steel which is already established in india.

Is microsoft american company(its R&D is also overseas India and China)....or google american company( when most of its R&D is done overseas)...so you all people the same way Arcellor mittal is indian company too...just based overseas...like a indian colony in europe...

Eventually Japan is going to have a smaller population. The individual members of that society are unlikely to be worse off financially than people today, even considering the burden of caring for their elders. The actual quality of life would very likely improve in Japan with less crowding.

A friend who was born and raised in China and now lives in Japan once told me: "Japan is the most communist country on Earth".

From my own experience living in Japan for 3 years and working in a traditional industry, I disgree with the optimistic view of Japan's future in this article: as the industrial economy is replaced by the knowledge/services economy, that communist mindset will hinder the transition to the flexible, unstructured mindset required to thrive in the new world.

In Japan, disruptive thinking is blasphemy. What is not process-driven and done "how we've always done it" is destined to fail.

Japan needs to stop insulating its businesses from international involvement. This creates an inefficient market.
Instead, they should aim to create a Greater East Asia Co-Prosperity Sphere, which will encourage economic integration with neighboring nations.

"Wonder why every once in a while Economist fancies on Japan and its beleagured state of affairs. Is it love, passion, pity or a Japan stationed Economist author reprinting the routine? "Perhaps because The Economist is an economy publication and Japan is the third largest economy in the world (after the EU and the USA)? And as such, it is the first of the major economies to face a new set of economic and demographic challenges (south Korea and Italy are even worse off, but they're smaller). Seems fairly prudent to try to learn as much as possible about the current state of affairs and what works (and what not) to mitigate the effects. As you say, other countries will follow in these footsteps so finding out about it is kind of important.Overall, the common issue for Japan, Italy and south Korea is that they have a modern, liberal economy (as opposed to a repressive feudal, agrarian one). But they have never really liberalized the society; family and societal values are stuck in pre-liberal times. Countries that are liberal all the way (the Nordic countries; USA; lots of other examples) are doing fine, demographically. Countries yet to liberalize are doing fine demographically as well (though being disasters in many other respects of course). Societies stuck halfway between liberalism and tradition are the ones getting into trouble today.More about it here: http://janneinosaka.blogspot.com/2008/07/fertility-in-new-york-times.html

The quality of articles is going down. Its surprising to see wrong facts in the ECONOMIST articles.

Arcelor Mittal of India .....?? Since when the company became Indian? As far as I know its a European company. Or is it the same old story of blaming India and China of gobbling up the whole world economy?